Viridien S/Adr

Good day, and thank you for standing by. Welcome to the Viridian Third Quarter 2025 Financial Results Conference Call and Webcast. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you need to press star, one, one on your telephone keypad. You will not hear an automatic message advising your hand is raised. To withdraw a question, please press star, one, and one again. If you wish to ask a question via the webcast, please use Q&A box available on the webcast link anytime during the live event. Please be advised that this conference is being recorded. I would now like to hand the conference over to our first speaker today, Alexandre Leroy. Please go ahead.

Good morning and good afternoon, everyone. Thank you for joining us today for Veridian's Q3 2025 results presentation. I'm Alexandre Leroy, Head of Investor Relations and Corporate Finance. We are hosting today's call from Paris, and I'm pleased to be joined by Sophie Giotia, our chair and CEO, and Jérôme Serre, Group CFO, who will walk you through our performance. Before we begin, a few housekeeping items. This call is being recorded and is accessible via both phone and online platforms. An audio replay will be available shortly on our website, www.beuridiongroup.com. the presentation slides are also available for download from the website please note that today's presentation includes forward-looking statements actual results may differ materially from those expressed or implied today relevant risk factors are detailed in our 2024 universal registration document filled with the french financial market authority ams as usual we conclude with a q a session And finally, a quick reminder that Gerardien comments primarily on segment figures, which reflect our internal management reporting. These differ from IFRS numbers, also published today, due to IFRS 15 impacts on our Earth data business accounting. With that, I now hand over to management, starting with Sophie, who will take you through the key business highlights for the quarter. Sophie, the floor is yours.

Thank you, Alexandre. Good morning and good afternoon, ladies and gentlemen. I'm now on slide two. Q3 2025 market marked another strong quarter, both operationally and financially. Operationally, our geoscience business continued to deliver robust results, leveraging market-leading technologies that addressed critical industry needs and drive value across both exploration and production. Earthdata late sales were particularly strong, fueled by sustained customer demand for our advanced datasets in mature and strategic frontier bases. This momentum was further supported by transfer fees from recent client M&A transactions. In sensing and monitoring, the land segment maintained solid performance, contributing meaningfully to the quarter. And financially, segment revenue reached $313 million, a 27% increase year-on-year. Segment adjusted EBITDA rose to $167 million, up 70% year-on-year. Net cash flow generation totaled $53 million for the quarter, bringing the year-to-date figure to $62 million as of September 2025. We remain confident in our outlook, our asset-light strategy, our focus on high-end technical solutions, and disciplined multi-client approach drives strong performance. Combined with supportive market fundamentals and a solid backlog, we confirm our full year net cash flow target of $100 million. Let me re-emphasize, this $100 million excludes any potential cashing for overdue receivables from Penex. Moving on to slide four. Q3 2025 was another solid quarter, with external revenue rising 5% year-on-year to $108 million. Activity remains strong in geoscience, driven by large ocean bottom node imaging projects in key mature basins, particularly in offshore fields in Brazil, in the US Gulf, where clients rely on our technology to optimize production. The Middle East also remained active, especially Abu Dhabi, where significant volumes of data were acquired. Despite a volatile oil price environment, order intake remained robust, underscoring our strategy and sustained industry demand for high-end imaging solutions that enhance exploration success and production efficiency in increasingly complex oil fields. Notably, over 50% of our geoscience revenue is tied to development and production activity, making this business sensitive to all price fluctuations compared to more exploration-driven segments. At the end of September, our Black Lock 2 stood at $290 million, providing strong visibility for sustained activity and cash generation, not only for the remainder of the year, but also into the first half of 2026. We remain confident in the resilience of our geoscience business, supported by a focus on complex offshore projects, long-term partnerships with value-driven clients, including leading IOCs and NOCs, high-end OBN imaging, which plays a pivotal role in development and infrastructure-led exploration. And this is an area where we lead the industry. Let's go to slide five. It illustrates a tangible example of how our geoscience imaging services directly contribute to optimizing field production, even in the most complex reservoirs. The image showcases BP's Atlantis field in the US Gulf, but the same approach applies to other challenging environments, including Brazil, Norway, Angola, and beyond. In this case, we partnered closely with the operator to deliver precise, high-end imaging of 4D OBN surveys, that is repeated ocean bottom node surveys over time. This enabled a detailed monitoring of fluid movement within the reservoir, allowing the operator to strategically inject fluids to enhance hydrocarbon recovery, optimize overall performance, and accurately position and drill new wells while minimizing drilling risk. For the operator, This translates into optimized production, improved economics, and a lower carbon footprint across both existing and new infrastructure. And for Viridian, it means recurring business anchored in production activities, strong exposure to development-led operations, and deep long-term relationships with clients who value our expertise in imaging, complex reservoirs offshore, especially through high-end combiennes where we lead the industry. Now turning to slide six for the Earth data performance review. In Q3 2025, EDA delivered a very strong performance with revenues up 63% year-on-year. This growth was driven by two key factors. Sustained industry demand for high-quality data, both in mature basins and high-potential frontier areas where we are strategically positioned, Transfer fees stemming from recent client M&A activity within the industry. Excluding transfer fees, which are a standard component of our Earthdata business, aftersales were strong. While the scale of transfer fees can vary year by year, their contribution this quarter was notable. Operationally, we made good progress on the Megabar Extension Phase 1 project in Brazil, reinforcing our presence in this attractive emerging basin. We're actively engaged in discussions for new projects in the U.S. Gulf and Eastern Mediterranean, with the latter showing renewed exploration interest, particularly in Egypt, as highlighted in recent industry headlines. Looking ahead, we remain confident in the long-term value and performance of our multi-client library, underpinned by the quality and relevance of our data sets, the strategic geographical focus, and our disciplined asset-light investment approach. Importantly, E&P companies are reaffirming their commitment to selective exploration, maintaining budgets despite potential short-term macroeconomic headwinds. Several countries are also evolving their regulatory framework to attract investment through licensing rounds and other incentives, which should further support multi-client sales momentum. As of September 2025, our Earth Data Library net book value stood at $534 million, concentrated in our most active offshore regions, including Norway, Brazil, and the US Gulf. And now on slide seven. I would like to highlight a highly valuable project for our clients, one that is also cash-generative for the region. This project is located offshore Uruguay, where we hold the marketing rights for 25,000 square kilometers of legacy streamer data acquired between 2012 and 2017. Recognizing Uruguay early on as a promising frontier area, we strategically entered the market by leveraging our high-end imaging technology. The dataset was re-imaged using our latest innovation, notably our unique TL-FWI, resulting in a remarkable improvement in image quality. This led to the identification of multiple high-potential prospects sparking strong clients' interest. And projects like this that leverage our imaging leadership typically receive hyperfunding and represent $30 to $40 million, or 15 to 20% of our annual multi-client capex. They are very attractive for Virgin because they allow us to unlock new frontier plays with minimal risk and high return, maximize the value of legacy data, and strengthen the relationships with local authorities, a key success factor for long-term engagement and success. This approach not only delivers meaningful value to our clients by enabling better informed exploration decisions, but also reinforces the region's strategic positioning in frontier basins and supports our cash generation objectives. Now moving on to slide eight, covering sensing and monitoring performance. In Q3 2025, SMO revenue grew 16% year on year, reaching $69 million. While our marine segment showed improvement compared to last year, momentum remains subdued. Overall growth remains primarily driven by the land segment, which continues to perform strongly. Our land nodal system, WING, is gaining traction with expanding sales across Asia and Latin America, reflecting growing market adoption. In Moraine, our tuned pulse source is now deployed across all sparse OVN surveys in the U.S. It is increasingly recognized as the reference solution for acquisitions requiring low-frequency signals, essentially for high-end subsurface imaging. Let's focus on land, as shown on slide nine. Activity remains resilient and well diversified, supported by the healthy mix of flagship high productivity surveys underway in North America, where we currently have over 80,000 nodes delivering excellent data quality. Multiple medium to small crews active across South America, the Middle East, and Asia, providing a broad geographical track record and install base. Technology momentum is also encouraging. We're seeing strong industry interest in Accel, our new job-only nodal solution, which was recently showcased at the Image Trade Show in the US, following its debut at EAG in France last June. We expected the Accel orders strengthening our SMO business in 2026. Under our New Businesses initiative, We have also achieved a milestone with the first deployment of one of our mainstream nodes for hydrogen projects, expanding our reach into emerging energy sectors. It's worth noting that even in the absence of Megacruise, SMO has demonstrated its resilience thanks to our deep market penetration, optimized operational structure, and strong reputation for quality and customer service. With that, I'll hand over to Gérôme, who will walk you through the financial performance review.

Thank you, Sophie. Good morning and good afternoon, everyone. We are now on slide 11, covering group segment revenue. Over the first nine months of 2025, we generated $888 million, up 14% year-on-year. In data, digital, and energy transition, our DDE segment, Revenue reached $639 million, an increase of 17% compared with the first nine months of 2024, driven by both geoscience up 13% and Earth data up 21% year-on-year. In sensing and monitoring, revenue totaled $249 million over the same period, representing an 8% increase year-on-year

driven by a robust land activity and continuous growth in new businesses. Turning to slide 12, covering profitability.

Total segment adjusted EBDA reached $417 million over the first nine months of 2025, representing a strong 40% increase year-on-year. This performance was mainly driven by our DDE segment, delivering 100 million of incremental EBITDA year-on-year and achieving a margin close to 64%. This is explained by, on one hand, a higher level of revenue at both geoscience and of data, which, as you know, have a strong margin conversion. On the other hand, no vessel penalties following the final payment to settle the contract with Shearwater back in January. Regarding sensing and monitoring, SMO, it contributed an additional $13 million of EBITDA versus last year, thanks to revenues, higher revenues, as well as incremental cost savings from the restructuring plan we have rolled out in January 24. On the downside, SMO profitability was impacted by the steep depreciation of the US dollar. SMO has indeed a significant portion of its cost base in euros, given the location of main manufacturing and R&D side. Over Q3 2025 alone, this quarter, this was a negative $3 million impact compared to last year, which translated into about 100 basis point lower profitability over the first nine months of 2025. Despite the Fed wins, SMO adjusted operating income margin reached 5.3% year-to-date, a significant improvement compared with last year when they posted a negative 3%. Moving to slide 13 for the IFRS figures. The IFRS 15 adjustment continues to be significant this year, reaching minus $113 million on revenues and EBITDA over the nine months of 2025, versus plus 13 million last year over the same period. This adjustment mainly relates to our ongoing Earth data surveys in the US Gulf and Norway, which will be mostly completed by H126. As a reminder, in our segment reporting, we continue using the percentage of completion methodology or data project, which better reflects our business activity and cash generation of the division and which IFRS 15 does not allow for. Despite this negative IFRS adjustment and a much lower contribution from discontinued operation compared to 2024, net income for the first nine months of 2025 stood at 19 million, almost in line with last year. Moving on to slide 14, and how this translates into net cash flows. We generated 62 million of community net cash flow over the nine months of 2025, including a strong 53 million in Q3 alone. If we look at the bridge versus the same period in 24, when we generated $34 million, the picture is quite clear. On the positive side, a much stronger EBITDA contribution, up 123 million year-on-year, and lower CAPEX mainly as per data, contributing most of the additional 28 million of extra cash. These positives were partly offset by two main elements, a 100 million negative impact from working capital, primarily linked to higher PEMEX receivable on our balance sheet, and lower payables on ongoing EDA projects reflecting their failing. The other line, at minus 23 million, is essentially the net effect between the savings achieved since the end of the vessel commitment and the fact that in 2024, we benefited from a one-off $38 million cash flow from the settlement of a long-standing litigation with ONG. On the Pemex front, we continue to actively pursue options to monetize our exposure, maintaining regular discussions both with Pemex and with several banks on potential factoring solutions. And actually, on a positive note, we were contacted by Pemex this week regarding a partial payment of our receivables. It's still very early to comment in detail, but this could potentially represent more than 20 million of cash for very good. We remain very cautious at this stage, as this is a recent exchange with the company, and there is still significant administrative work ahead with uncertain timing. Still a positive development worth noting. Finally, a few words on our debts, moving on to slide 15. As you know, Veridian remains very active in terms of liability management. First, we continue to maintain active discussion with several financial counterparties looking for more competitively priced financing solutions. On that front, even if the amount remains modest, it's worth highlighting that in early July, we obtained a 10 million unsecured loan from the French state investment bank BPI at an attractive 4.6% interest rate. The fact that BPI, which used to be a historical partner of the old CGG is now supporting us again, is a clear testimony of the significant progress Veridian has made in strengthening its financial profile. Separately, in early October, we initiated a partial redemption of our outstanding bond, using the flexibility provided in our documentation. We then bought back $25 million and €20 million from the respective branches, generating annual interest savings of approximately €4.5 million going forward. If you look at the chart on the left-hand side, it shows the evolution of our gross debt over the last 12 months, stated to exclude the adverse effects impact on our Euro-denominated bonds, and to include the October partial redemption. Overall, you see that Viridian has reduced its liability by about 200 million, or roughly 17%, and we intend to continue allocating most of our cash flow towards further debt reduction in the future. With that, I will hand it back over to Sophie.

Thank you, Jérôme. We're now on slide 17. In conclusion, our Q3 2025 was a strong quarter for Viridian, marked by robust operation and financial performance. With improved visibility into year-end, we confirm that we will reach our $100 million net cash flow generation in 2025. I reiterate that this target does not include any collection of PEMEX receivables, which is hopefully some good news to come in the coming months on that front. Exploration and cycling activity are expected to remain stable, even in a volatile oil price environment, as these services are critical for sustaining production and unlocking new reserves, especially for longer cycle offshore investments. While operators may adjust capex spending in response to price fluctuations or price fluctuations, Reductions are likely to be concentrated in other parts of the value chain, such as drilling, or in low carbon. The structural fundamentals of our market segment remain positive. Accelerating fuel depletion and mounting reserve replacement pressures are driving operators to selectively prioritize resource security over short-term cost savings. This, together with our asset-light strategy, focused on high-end technically differentiated solutions, and a disciplined multi-client approach translates into a continued robust outlook for Viridian. Our clients continue to invest in high-end seismic technologies and multi-client data libraries, which enable them to make better informed exploration and development decisions. Thank you very much, and I now open the floor to your questions.

Thank you so much, dear participants. As a reminder, if you wish to ask a question, please press star 1 1 on your telephone keypad. and wait for a name to be announced. To withdraw a question, please press star, one, and one again. Alternatively, you can submit your questions via the webcast. Please stand by, we'll compile the Q&A role studies. We'll take a few moments. And now we're going to take our first question. And it comes to the line of Kevin Roger from Kepler Chevro. Your line is open. Please ask your question.

Yes, good evening. Thanks for for taking the time. I have two, mostly, if I may. The first one for you, Sophie, maybe a bit of, in a way, sensitivity or sensibility analysis on geoscience, because you clearly underlined during the conference call that there are currently some uncertainties regarding oil price, but that you expect your business, thanks to the value addition that you bring to the clients, to remain quite resilient. I was wondering if we make a scenario of, let's say, a $50 all-price environment for 26, what would be the top line of geoscience in terms of magnitude? I know you will not provide the exact number, but just a sense to understand what's the kind of reaction that you expect on geoscience in a $50 all-price environment. That would be the first question. And the second one is maybe more for you, Jérôme. You just mentioned that Pemex contacted you for the payment of a part of the receivable that you have for maybe some 20 million, etc. But considering the movement in UNET working capital year to date, the net number is probably much higher than that. This call that you had last week, does it change anything regarding the strategy that you maybe had in mind a month ago regarding factoring with banks, et cetera, or you will continue to deeply look for the factoring of the receivables from Pemex. That's it for me. Thanks.

Yes, thank you. And good evening, Kevin. Thanks for that question. So we, of course, ask ourselves the question about the price. The, as you see, geoscience is the, doesn't react very quickly to changes in the client spending because of the backlog that carries us through with reasonable visibility. When I think about it, I think about geoscience being exposed to exploration and production. And I did explain that it's not just exploration, it's really development and production, which makes us very resilient. If you think about it, the first order of variation would be linked to exploration and production capex variation offshore, which I don't expect, even if the oil price goes down to 50, there will be very big changes in that number. Now, there are ways to counterbalance, and that would be our effort, is to counterbalance that through the fact that OBN, ocean bottom nose, which is mostly used in development and production, requires more intensity in processing. So meaning the share, if you look at the whole package of acquisition plus processing, the processing bit is more important. So the fact that the market shifting towards OBN is favorable to us because we have a higher market share in that space. And also in a low all-price environment, our clients are going to look at cutting their internal processing teams, which means we have increasing chances of getting that business. So yes, We'll look at what the ENP CAPEX does offshore, but I think there will be other mechanisms for us to compensate for the drop.

Maybe another data point for you, Kevin, that we presented during our refinancing to illustrate the resilience of geoscience is the peak and trough between... I mean, the highest point was 2019 when we look at the history and the loss And it was at 17%. And the difference in all price was not only $10 to a date, as you know. So that gives you a reference point. And regarding your question on the Pemex, yes, we are obviously pleased that Pemex hopefully will eventually pay a partial payment, what they owe us. And yes, given it's a partial payment, we are still pursuing very actively factoring routes. So there's no question we want to get all our money back by exploring all options. Okay. What we said is the 100 million target or guidance for this year. we are comfortable to reach it without Pemex.

Okay, so that will be 100 million even if you do not get anything from Pemex.

Correct. So that's what we comfortably believe. Two reasons versus what we discussed at the last quarterly course because we said we needed between 20 and 25 million. The first is we've been working on a another option as we said it at the time. So we have divested a small business in the US. It's a gauge business which was lodged under Fairfax. And the second factor is we anticipate slightly higher revenues than forecasted, which would translate into additional cash for the rest of the period.

Okay, but so that means at the end that if in the scenario that you manage to get the, let's say, roughly 20 million plus you make the factoring from what you have as a receivable, I mean, you can clearly be around 150, something like that, net cash flow, if you manage to get the 20 million plus the factoring at the end.

On paper, you're right. Honestly, the factoring... First, we need to land a deal with one of the banks we are actively discussing with. And the second topic is the consent we require from Pemex. And as you know, the consent within a state-owned company like Pegmex may take some time. So I would not anticipate at this stage at least the cash to be received this year from the factoring side.

Okay, thanks a lot for listening.

Thank you. Thank you. Now we're going to take our next question. And the next question comes from Cyril Madruguet from Fremont Management. Your line is open. Please ask your question.

Yes, hi. Congratulations on the quarter and thank you for the presentation. I guess part of my questions have been answered, but Previously, I believe you commented on the 100 million net cash flow breach for 2025, factoring in 25 out of 50 million in Pemex receivables, right? Today, you're confirming this 100 million full-year target regardless of any Pemex receivables. So I just wanted to double-check that tweak, and I understood in your answer that that should be correct, and maybe related to that, how much in Pemex receivables remain outstanding as of Q3, and what timing are you expecting for the collection? Although I understand it's uncertain, but happy to hear some color here. Thank you.

So, yes, I do reiterate what I said. We were comfortably reiterating our 100 billion cash flow target for the year without PMAX. The position of our receivable with PMAX We said it was 50 million plus at the end of June. It has slightly increased from the projects that were in the pipe since, I think, Q2. And your question was about the factoring. Am I correct?

I was wondering if you could give us a little bit more color on the timing you expect in Q1.

This one is a bit difficult. Honestly, we just got called by Pemex. We had a meeting in Mexico this week. So it's not a needy scheme. Some other players have already some payments. So hopefully it will be easier. But And it will be, again, a partial payment. It will not be the full receivable that I mentioned earlier on.

Understood. Thank you for the clarity.

Thank you. Now we're going to take our next question. And it comes to the line of Mick Pickup from Barclays. Your line is open. Please ask your question.

Good evening and a nice quarter. I think I'll start with, I'm not as negative as Kevin. And what we've seen this quarter is we've seen heads of exploration at some of the IOCs are moving seats, which suggests that companies are looking more exploration. And my colleagues are talking more and more about exploration and discoveries when they're talking to the investor community. So I'm just wondering what you're hearing about the medium term from your clients, because it would very much suggest to me that exploration is back on the agenda.

Yeah. Hi, Mick. Thanks for the question. Absolutely. There's a lot to speak about exploration. There were, as you know, conferences in London mid-October that highlighted that. And we do see much broader, and I did highlight this in Q2 already, much broader interest from clients. So they continue to still favor and they like the infrastructure-led exploration because it's lower risk. but also they recognize the need in the long term to position in those areas. And in parallel as well, countries are making it easier for clients to invest. The reality is the speak hasn't completely translated yet into dollars, meaning they're trying to do all these things at sort of a flattish budget. And that's perhaps the disconnect that we're in right now. There's a lot of... momentum and interest in exploration has been completely translated into increased budget. But one might say it's not been decreasing, it's been flattish. And that's what we see moving forward. Eventually down the road, as clients start taking positions in Africa, in Asia, in South America, the budget will need to increase because there will be more seismic acquisition, there will be drilling associated with the commitment. So I think we're in the early stages of that momentum in exploration.

Thank you. Thank you.

Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star 11 on your telephone keypad. Alternatively, you can submit your questions via the webcast. And now we're going to take our next question. And the next question comes to the line of Baptiste Le Bac from Odo, BHF. Your line is open. Please ask your question.

Good evening and congratulations for these good results. Two questions from my side. The first one related to Jerome's comments regarding, let's say, more comfortable regarding the guidance. You mentioned, Jerome, divestment of small business in the US. Can you give us an idea of the size of these disposals in terms of net cash for you? And the second one is related to transfer fees. Can you give us an idea of the amount of these transfer fees? Thank you.

I will answer the first one. I will not answer the second one.

As you know, we never disclose the size of our transfers.

but for the sale of our cage business called GRC in the US, it was slightly above 10 million.

Okay, thank you. And the transphobia, I don't know if... No, it's fashion.

We consider it part of the business model. It could be up and down depending on the year. This year, it's higher than last year. somewhat higher, but even if we correct from the transfer fee, the underlying after-sales are still very strong and very good. So we're confident and we're happy with the level of after-sales even correcting from the transfer fee.

No more transfer fees on the radar screen for, let's say, coming quarters?

There is still M&A activity happening in the North Sea, but it really depends on whether the client takes the footprint and how much they decide to keep. So I wouldn't be a very significant member.

Perfect. Thanks a lot. Thank you. Thank you.

speakers and further audio questions and i would now like to hand conference over to alexander leroy for any written questions thank you uh we have a couple of questions from steve alder um over the the internet um please ask the question on the the go to disposal if it's a q3 or a q4 cash inflow uh so said differently the q3 figure already figures to 10 million. No, it's a queue for cash inflow. The second question is that if there might be some other disposal of non-core activities within the sensing and monitoring segment going forward?

There is a similar business as the one we just did in the US. We have another gauge business here in France. That's something we will indeed potentially look to dispose in the future.

Another third question. So first, congrats for our liability management. And Steve asks if there is any ability to repay the asset-backed debt facility we have in the UK, and if it's something that is on top of the list.

Yes, there is an arbitrage to use. We've done already 50 million, as we said, in October of debt buyback. We want to do another 50 on the back of the 100 million cash flow we believe we can generate by year-end. And there is an arbitrage between these 30 million asset-backed facilities which was, as you may know, related to our data center in the UK, and the arbitrage between this debt, 30 million, and again, redeeming some bonds. We have some early repayment fees that basically make the difference between the two, so we will go for the cheapest option between early repayment and

reducing the interest rates of both those facilities. No more questions on my hand.

Operators, do you have any questions over the phone?

There are no further questions over the phone. Over to you, Alexandre.

Excellent. So please, Sophie.

Thank you very much. I'm very pleased with the quarter and re-emphasizing the target of $100 million cash flow for the year without the PEMEX. We're quite confident we'll be achieving that. Thank you for listening and I look forward to engaging with you in the coming weeks.

Thank you. This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.